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Michele Lerner, a contributing writer to The Motley Fool, has been writing about personal finance and real estate for more than two decades. Her work has been published in a wide range of publications and websites including Bankrate, The Washington Post, Insurance.com, HSH.com, REIT magazine, National Real Estate Investor magazine, The Washington Times, Urban Land magazine, Investopedia, and in numerous Realtor association publications. She is the author of “HOMEBUYING: Tough Times, First Time, Any Time.”

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A 2012 Pew Research Center Report, "The Rise of Asian Americans," identified Asian Americans as "the highest-income, best-educated and fastest-growing racial group in the United States." In addition, according to the report, Asian Americans are more satisfied than the general public with their lives, finances, and the direction of the country, and they place more value than other Americans do on marriage, parenthood, hard work and career success.

YuKong Zhao / Facebook
YuKong Zhao (pictured), an expert in China business and strategic development at Siemens, believes the secret to the success of Asian Americans can be found in the enduring messages of Confucius.

Zhao, who grew up in a Confucianism-influenced family in China, moved to the U.S. in 1992. His bicultural experience and deep understanding of Confucianism has led him to conclude that Americans can learn from Confucian values to improve their lives in a variety of ways.

Most noteworthy in the differences between Asians and non-Asian Americans is their outlook on life. "Americans have a short-term view of life and Asians have a long-term view," says Zhao. "This impacts everything about their lives, but is particularly important when it comes to money management."

Confucian Money Management Tips

Zhao's book, "The Chinese Secrets for Success: Five Inspiring Confucian Values, published in April, offers practical guidance for money management as well as other topics. In it he focuses on five Confucian values:

1. Determination for leading an outstanding life.
2. Pursuing an excellent education.
3. Thrift; saving for a better life.
4. Caring for your family.
5. Developing desirable friendships.

"All these values contributed to the resurgence of the Japanese economy after World War II and have helped develop the economic strength in Korea, Taiwan, Singapore, and Hong Kong along with China. On a more individual basis, these values have helped Asian Americans become a 'model minority' in the U.S.," Zhao says.

The thrift value, in particular, contains key lessons on managing money conservatively and wisely.
While the money tenets below are emphasized in many cultures and countries, they have been especially embraced in Asian cultures. Looking at them through the Confucian lens, Zhao offers an interesting way to frame one's approach to financial well-being.

"Chinese people take the long view of money, so even working-class people save money so that they have it later to invest," says Zhao. "Asians hang on to their cash and live within their means rather than taking on debt."

Zhao recalls reading a study that showed that 40 percent of Americans live beyond their means, with credit cards being a tool that enables them to do so. "A lot of Americans work just to pay the interest on their debt, but Asians follow the philosophy that it's better not to have any credit card debt. They pay for their cars with cash. About the only debt most Asians will take on is a long-term, 30-year mortgage with a low interest rate."

Save for the future. "A big part of the lunar Chinese New Year celebration every year is to have a fish dish which represents having a surplus all year," says Zhao. "It's a big reminder that every year you need to save money for the future."

Zhao says Asian American families focus intensely on saving for their children's education and for their own retirement. "In China, the savings rate across all income levels is 25 percent, but in the U.S., people save less than 5 percent of their income," says Zhao. Even working-class Asian American families sometimes pay cash for homes. They are able to do so because they have been consistently saving for their family's future needs, he says.

Be thrifty and spend wisely. "When I first came to the U.S., I lived in a basement and bought the cheapest food I could find so I could save money for my family to come here," he says. "It's very common for many Asian Americans to live frugally in order to save money."

Not only does the Confucian philosophy say you should save money, but it also emphasizes being wise about spending. Price isn't the only consideration: Quality figures prominently in the purchasing decision. Zhao says that's the reason, for example, you see many Asian Americans driving high-quality cars. It's not that they're drawn to buying a status symbol, he says; it's because they want to buy a reliable car that will last for the long term.

Teach your children about money. Studies show that American students consistently rank behind students in Singapore, Korea, Hong Kong, Taiwan and Japan in math skills. That's because Asian American families tend to place a lot of emphasis on following good money management traditions and avoiding American consumerism. It's a Confucian value to pass on knowledge from one generation to the next, says Zhao.

There is also an emphasis on learning math skills: "Students who aren't taught math don't know how to manage their money, either," he says. "They have no knowledge of the consequences of their money mistakes."

Think differently about your finances

"My goal with this book is to introduce Confucian values to a mainstream audience," says Zhao. "I think these values have helped Asian Americans weather the financial crisis better than other groups, so I want to share them with other Americans."

Saving consistently, avoiding debt, spending wisely and investing for the future are practices that have good results no matter where in the world they are followed.

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9 Comments

After reading the comments by Sailor48 and Sally, I just want to let them know regrettably they have jumped in too early to write their comments without even reading my book first.

First of all, my book advocates five inspiring Confucian values that anybody, any race can benefit from. My book is not to judge one race or one culture is better than another. In my book I advocate a balanced approach that picks the strengths of East and West, not just one side. In my book, I also applauded many great Western values such as the rule of law, free market system and independent thinking and also criticize many shortcomings in the Chinese society such as fake products. Like any society, Chinese society has its problems and challenges. The shortcomings Sailor48 listed are a failure of the Chinese government, not the failure of the five Confucian values I advocate.

Secondly, I feel sorry to learn the very strong bias Sally has toward the educational achievement Asian Americans have accomplished. I want to tell Sally, not all Chinese/Asian parents are tiger moms. They take their children to vacations and summer camps. If you, like me, have done a lot of vacationing with children, you will find in Disney world, on cruse lines, the ratio of Chinese American tourists is much higher than their 1.5% ratio in the US population. With regard to my experience of living in a basement, and saving every penny, it was to bring my wife to the US. That was a heroic story of a first generation immigrant, who had no any other income. I love my spouse dearly and was willing to make sacrifice to bring her to the US. I hope you would make similar sacrifice if you were in such a situation.

Finally, my book is written in a spirit of Confucianism. Confucius famously said: “Whenever walking in a company of three, I will surely find someone I can learn from.” Asian countries achieved rapid economic success by learning from great Western values such as free market system and rule of law (they do not call westerners racist when West promotes such universal values). Writing this book I have a big heart to share our great heritage—I also believe they are universal values—to help the American society continue advance. Do not be offended if someone tells you the unpleasant truth. Another Confucian wisdom I’d like to share with both of you is (in Chapter 8 of my book): A true friend is someone who is straightforward to your weakness, not someone who always flatters you.

Nonsense. (the Chinese love to think of themselves as smarter than others with a most virtuous culture. Some good points about weak spots in western culture, but one should round out the the other side of chinese culture with its love of power over others from its ethnocentric pride, desire for status, greed and grasping for wealth for all kinds of reasons. Look at China today - virtuous? Source: Yu Hua, "China in Ten Words"

"This example gives a sense of China's lopsided development: year after year chemical plants will dump industrial waste into our rivers, and although a single plant might succeed in gener­ating a thirty-million-yuan boost to China's GDP, to clean up the rivers it has ruined will cost ten times that amount. An authority I respect has put it this way: China's model of growth is to spend 100 yuan to gain 10 yuan in increased GDP. Environmental degradation, moral collapse, the polarization of rich and poor, pervasive corruption -- all these things are constantly exacerbating the contradictions in Chinese society. More and more we hear of mass protests in which hundreds or even thousands of people will burst into a government compound, smashing up cars and setting fire to buildings."China today is a completely different story. So intense is the competition and so unbearable the pressure that, for many Chinese, survival is like war itself. In this social envi­ronment the strong prey on the weak, people enrich them­selves through brute force and deception, and the meek and humble suffer while the bold and unscrupulous flourish. Changes in moral outlook and the reallocation of wealth have created a two-tiered society, and this in turn generates social tensions. So in China today there have emerged real classes and real class conflict.

to be so frugel with ones self is sad. We r only here for a short period of time and should leave this world having great memories of wonderful experiences we have had. Asian children study 24/7. What happened to fun, playing, summer camp. I would not raise my child like that. We should save but should also experience as much as we can, trips to the beach, trips around our great country, family fun and lots of it. Thats what summer is for. I think there attitude is sad. A basement, poor quality food, no free time, no fun. Just sad to me!

as long as your fun is not funded with borrowed money then I agree with you. If you borrow $$ to have fun and then you do not pay it back immediately, then your fun is really costing you interest on top of principal, which is defintely not a wise financial decision.

I agree . the failure of this country is due to its piggish love of credit ! when the bill comes due it ends up costing far more than borrowed and that is a strain I no longer wish to be a part of ! dont get me wrong I made the mistake too , as I was living paycheck to paycheck ! always paying my bills on time ! until I couldnt ! thats when you reach true friendship and enlightenment or you commit financial suicide by adding to your own demise by borrowing to pay for more debt ( hm sounds familiar ) to bad more people dont live as the author describes they would find peace and understanding.